Now thats was very interesting insight !
Thanks a lot Trader KGB
Thanks a lot Trader KGB
"FXCM's is the only firm that runs their Currenex through their dealing desk." I'm paraphrasing, but that's what a Currenex insider told me once about FXCM's Currenex. While there is some rigging going on on every Currenex hub to some degree, this [feeding it through a dealing desk] is just the ultimate.
Recently, another trader I work with wanted to diversify and fund some of our new traders at FXCM. He has had a good relationship with them in the past and claims that their back office, handling of sub accounts, customer service, etc., etc. is great. At the same time, it's important to note that his style is very long term in nature. Usually, longer term systems are not sensitive to the particular broker or liquidity hub used; so that's why his particular experiences with this broker might have been good. When he brought up FXCM, I said, "OK; you mean the longer term guys, right?" He said, "No; the shorter term guys too. They have Currenex and so-and-so told me that their spreads are very competitive interbank spreads."
Having spent the last few years dealing with many brokers and focusing on active, day trading systems, I told him that I would prove to him that what he was being told was at least an undeliberate untruth.
So on August 31st, 2007, I recorded a short video of the screen during the London session, comparing EURUSD + GBPUSD on BGC's Currenex (BGC can be added to Trader KGB's list) and FXCM's. I attached a screenshot to this post. Notice that FXCM's Currenex is way off the real market. When I showed this video to my associate, he freaked out. IMHO, it doesn't make sense to use FXCM for Currenex until they change their focus.
IMHO, BGC (in London) is pretty good. If you're trading news, don't go there or at least keep your trades to less than $2M (but that's the same advice I give most news traders that want to graduate to Currenex).
Recently, another trader I work with wanted to diversify and fund some of our new traders at FXCM. He has had a good relationship with them in the past and claims that their back office, handling of sub accounts, customer service, etc., etc. is great. At the same time, it's important to note that his style is very long term in nature. Usually, longer term systems are not sensitive to the particular broker or liquidity hub used; so that's why his particular experiences with this broker might have been good. When he brought up FXCM, I said, "OK; you mean the longer term guys, right?" He said, "No; the shorter term guys too. They have Currenex and so-and-so told me that their spreads are very competitive interbank spreads."
Having spent the last few years dealing with many brokers and focusing on active, day trading systems, I told him that I would prove to him that what he was being told was at least an undeliberate untruth.
So on August 31st, 2007, I recorded a short video of the screen during the London session, comparing EURUSD + GBPUSD on BGC's Currenex (BGC can be added to Trader KGB's list) and FXCM's. I attached a screenshot to this post. Notice that FXCM's Currenex is way off the real market. When I showed this video to my associate, he freaked out. IMHO, it doesn't make sense to use FXCM for Currenex until they change their focus.
IMHO, BGC (in London) is pretty good. If you're trading news, don't go there or at least keep your trades to less than $2M (but that's the same advice I give most news traders that want to graduate to Currenex).
- #32
- Oct 3, 2007 10:12am Oct 3, 2007 10:12am
- | Joined Nov 2006 | Status: Come and get it! | 183 Posts
I'm only familiar with Currenex and HS FXi (the top two liquidity-wise outside of the EBS world). There are many other smaller ECNs that I do not have experience with (FXAll, Baxter, LavaFX, eSpeedFX etc).
I also have serious doubts about Currenex (potential price shading, spread padding, etc). Everything I spoke of above about the benefits of a primary hub can be pretty much disregarded now that I'm running on it myself. 2 pip spread on eur/usd and 4 pip on usd/jpy are atrocious, even for a dealing desk broker.. I haven't gotten to the bottom of it yet, those spreads occurred while IB and HS FXi were quoting 0.5pip. This is why one must do a high level of DD before selecting the optimum platform for their business.
You are right, Currenex has the potential to be rigged. Then there's the whole issue with the last look provision designed to give the liquidity providers the upper hand. All in all, I don't think it will ever make much of a difference (unless you're trading with FXCM
) even to a high-frequency trader, UNLESS you're doing something extreme like swinging a lot of size during news releases, hitting the spread inversions, etc.I was told by the vCap people that in the Currenex hub they're aggregating, the liquidity providers agreed not to use their last-look-provision-get-out-of-jail-free card. That of course, remains to be seen. We're planning to set up our server in the same building to achieve sub-1ms transit times to the CAX; so the only variable will be the execution speed on their end. We'll run a high-frequency scalper that trades a few thousand times a month and a cross currency arb model that has the potential to generate thousands of trades a day. I think that will give us a pretty good idea of whether or not the last-look provision is in play or not.
Play ball!
- #33
- Oct 3, 2007 10:19am Oct 3, 2007 10:19am
- | Joined Nov 2006 | Status: Come and get it! | 183 Posts
If you do the volume, a multi-ECN automated gateway:
http://www.vcapfx.com/cax.asp
http://www.flextrade.com/flexfx.php
- #37
- Oct 3, 2007 12:48pm Oct 3, 2007 12:48pm
- Joined Mar 2007 | Status: ~~~~~~~~~ | 3,692 Posts
Thanks for the great info guys!
It's all really valuable and interesting.
Great discussion and sharing - what the
FF is really all about!
It's all really valuable and interesting.
Great discussion and sharing - what the
FF is really all about!
Thanks for the great info guys!
It's all really valuable and interesting.
Great discussion and sharing - what the
FF is really all about!